After anteing up $2.1 billion to replenish its deposit insurance fund on Sept. 30, the thrift industry posted its first quarterly loss since 1990, the government announced Wednesday.
Thrifts lost $505 million in the third quarter, down from a profit of $1.93 billion in the second quarter and $1.59 billion a year ago.
"The important fact is that the one-time charge is now behind us," said Office of Thrift Supervision Director Nicolas Retsinas.
The OTS said the 1,378 institutions it regulates paid two-thirds, or $3.2 billion, of the special assessment levied by a Sept. 30 law rebuilding the Savings Association Insurance Fund. The after-tax expense for these thrifts came to $2.1 billion, according to OTS.
(Another 600 thrifts are regulated by the Federal Deposit Insurance Corp. In addition, banks that own thrift deposits contributed to the $4.3 billion insurance fund rescue.)
Capitalizing the savings association fund made it possible for thrifts, like banks, to receive deposit insurance at no cost. But in the third quarter, thrifts were still paying at least 23 cents for every $100 of deposits.
The percent of the industry's assets funded by deposits hit a record low of 67.3% on Sept. 30, down from 68.1% at the end of the second quarter. The special assessment took a bite out of the industry's equity capital, which dipped to 7.82% in the third quarter. Still, 95% of thrifts meet the government's definition of well capitalized.
While the industry saw its first failure since May 1995 in the third quarter, the number of institutions on the OTS watch list dropped two to 31. These thrifts hold $6.7 billion in assets, down $400 million in the quarter.
The industry's assets were $778 billion on Sept. 30, a total that has remained steady over the last three years despite a decrease of nearly 300 thrifts.